TerrAscend Set to Buy Gage Growth in $545 Million Pot Deal
TerrAscend Said to Buy Gage Growth in $545 Million Pot Deal
(Bloomberg) -- TerrAscend Corp., a cannabis company with operations in three U.S. states, has agreed to buy Michigan-based marijuana seller Gage Growth Corp., furthering a wave of consolidation in the industry.
The agreement, which will expand TerrAscend’s operations to five states, values Gage at about $545 million, the companies said in a statement Wednesday. Bloomberg News reported on the coming deal earlier Wednesday.
The rush to combine in the cannabis business stems in part from its regulatory peculiarities. Since marijuana isn’t legal at the federal level in the U.S., companies have to cultivate and process it in the state they want to sell it in. As more states legalize pot, firms are keen to build up a presence in new markets, helping them reach more customers and work toward building nationally recognized brands.
The offer values Gage shares at $2.11 each, 18% more than Tuesday’s closing price, according to the statement.
Gage shares rose 3.1% to $1.85 at 10:30 a.m. in New York trading Wednesday. TerrAscend fell less than 1%.
The combined company will have operations in Canada and five U.S. states, including seven cultivation and processing facilities, and 23 retail outlets serving the medical and adult-use markets. The network is set to expand to 34 stores in coming months, said the person.
The deal gives TerrAscend access to Michigan, the third-largest U.S. cannabis market. Sales in the state reached $171 million in July, representing an annual market of about $2.1 billion.
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